Coronation Fund Managers (CFM), one of the country’s largest fund managers, continues to refuse to disclose details of the remuneration paid to its chief investment officer, despite this being a requirement under the Companies Act.
According to the act, annual financial statements must include "details of service contracts of current directors and individuals who hold any prescribed office in the company".
At its annual general meeting on Tuesday, Hugo Nelson, the chair of Coronation’s remuneration committee, said the committee believed its remuneration report was comprehensive.
"We don’t think such disclosure is to anyone’s benefit."
Nelson was responding to shareholder activist Theo Botha, who told the meeting that the act required the disclosure of remuneration paid to directors and prescribed officers.
Botha said that as chief investment officer, Karl Lienberger was a prescribed officer.
Coronation, which saw a R27bn year-on-year decline in assets under management to R587bn, and has seen its share price halve in the past 12 months, has a unique remuneration policy. At the core of the policy is the 30% of pretax profit, which was R1.96bn in 2018, which is allocated for employee remuneration each year.
This is invested in Coronation shares and Coronation unit trusts, which are housed in the CFM Deferred Remuneration Trust, and from there allocated to individual employees.
CFM chair Shams Pather, a trustee of the trust, told the meeting the board considered details of the remuneration paid to the chief investment officer and research analysts to be sensitive, and it was therefore not appropriate to disclose it.
Nelson said an important element of the remuneration policy was the retention of skilled staff and he suggested this could be compromised by the release of remuneration details that might encourage poaching.
Shareholder Anita Gilmore said that in light of Coronation’s recent poor performance, some staff departures might be a good thing. She said it was unacceptable that remuneration, even to nonexecutive directors, had been increased despite the reduced return to shareholders and unit trust holders. Nonexecutive directors saw their pay increase 7.8% to R4.7m in 2018.
"Shouldn’t remuneration also reflect how well investors are doing?" asked Gilmore, who pointed out that many of Coronation’s unit trust holders depended on them for a living.
Nelson told Gilmore the interests of investors and staff "will align through a cycle … over a meaningful period".
One shareholder, who asked to remain anonymous, told Business Day that the structure of the trust scheme was inappropriate, as it guaranteed generous payouts because of the billions of rand of assets that had been built up over 25 years.
"Even if they underperform for the next several years, the staff will receive hefty packages," the shareholder said.
The trust-based remuneration structure was put in place when the company was set up and details of it were included in the prelisting statement when it listed on the JSE in 2003.
For five years Botha has been trying to get the firm to disclose details of the trust deeds so that shareholders can see on what basis allocations to individual staff members are made. And for five years the firm has said it has no control over the trust.
At the meeting, Pather told Botha he would have to speak to the trust’s chair. Botha said his lawyer had communicated with the chair to no avail.
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